Futures contracts can be used to set prices on any type of commodity or asset, so long as there is a sufficiently large market for it. Some of the most frequently traded types of futures are outlined below:

What is a futures contract?*1 pointa. A contract that gives the holder the right to buy an asset at a specific priceb. A contract that obligates the holder to sell an asset at a specific pricec. A contract that gives the holder the right to sell an asset at a specific priced. A contract that obligates the holder to buy an asset at a specific price

Which of the following statements about futures are true:I. Futures is a standardised contract to buy or sell a specific commodity or financial instrument at a specific price at a predetermined future date;II. In Australia bonds futures are usually quoted at an index figure of 100 minus the yield so a dealer can follow a basic principle of buy low and sell high;III. Novation is the process to renew futures contracts when they fall due;IV. Standard delivery is more usual in futures markets.

Which of the following is NOT a type of futures contract?*1 pointa) Stock futuresb) Bond futuresc) Mutual fund futuresd) Currency futures

In the futures markets, if a futures contract is marked-to-market, this refers to the:Question 3Select one:a.interaction of the demand and supply forces in the market to determine the price of the options contract.b.interaction of the demand and supply forces in the market to determine the price of the futures contract.c.settlement of gains and losses on futures contracts on a daily basis.d.settlement of gains and losses on forward contracts on a daily basis.

What is the main purpose of futures contracts?*1 pointa) To provide a guaranteed return on investmentb) To replace traditional investments like stocks and bondsc) To transfer risk from one party to anotherd) To eliminate the need for financial intermediaries